The True Cost of Network Downtime

The True Cost of Network Downtime

Whether from a cyber attack, mishandled maintenance or any other reason, your network going down can cost you big. Suddenly you are unable to process payments, access the data you need and, in short, run your business. While network downtime may seem like a minor inconvenience, those idle minutes can really add up. In fact, the costs can be in the tens of thousands of dollars.

Monetary Loss from Downtime
Depending on the causes and length of network downtime, your small business could lose an average of $55,000 per year in revenue. Midsized companies are hit even harder, averaging a loss of $91,000 per year. Though these numbers may be surprising, all the little expenses really do add up. For instance, if your bakery’s system goes down, how will customers buy your cannolis? Now you have an employee being paid to stand at the register and do nothing. Later down the road, you may lose disgruntled customers, and may even have to run a campaign to apologize for the issue, if it persisted for a long time.

On a more technical side, the cause of the outage could also cost you money. If you own your own server and it was damaged or simply is worn out, for instance, you have to pay to have it replaced. That means new hardware and, of course, paying someone to install it. Even if you install it yourself, that’s still time you could be using for more important matters. As you can see, network downtime can easily cost you thousands, especially if it was due to a catastrophic server failure.

Calculating the Cost of Downtime
There are obvious costs for downtime caused by server issues. But to calculate how much lost productivity and other factors are costing you, you’ll need to do a bit of math and guesswork. To calculate the labor cost during downtime, use the following equation:

P x E x R x H

In this equation, P is the number of people affected, while E is the average percentage they were affected (you may need to do some clever estimations here). Then, R is the average cost of employees per hour, while H is the approximate number of hours the outage lasted.

Calculating lost revenue also requires some guesswork. Use this formula:

(G/T) x I x H

In this equation, G is your gross yearly revenue, while T is the total number of annual business hours. I is the percentage impact. This includes transactions, PR issues, lost customers, etc. A higher percentage is worse; use your best estimates here. Finally, H is again the approximate number of hours the outage lasted.

Are You Ready for Downtime?
No matter what you do, downtime will happen, unfortunately. As such, you must have a plan in place to make sure you do not lose too much revenue during these events. Having a highly skilled tech support company to set up and maintain your network is one of the best things you can do. That way, when the network does go down, it can quickly be rebooted and you can be running your business effectively once more.